national bank
NATIONAL BANK. / COURTESY

Tension is mounting between National Bank of Kenya (NBK) and most of its corporate clients, as the bank goes on the red line on several Central Bank safety ratios.

The bank is struggling with bad debt amounting to more than Ksh30.1 billion, part of it which it might be forced to write off for non-recovery. Ksh4.2 billion bailout money from principal owners has also delayed.

At Nairobi Securities Exchange, the share price for the lender has dropped by over 50 per cent, from Ksh9.15 last year to the current Ksh4.95.

The bank’s capital has gone down by 83 per cent, from Ksh10.1 billion to Ksh1.7 billion.

The current capital is only Ksh738 million, against the CBK statutory minimum of Ksh1 billion.

The bank has a core capital to total deposits ratio of 1.8 per cent against the statutory minimum of eight per cent. The core capital to total risk weighed assets ratio is at two per cent against the minimum 10.5 per cent.

By mid this year, the loan book was Ksh47.8 billion, down from Ksh57 billion at end of
December 2017, a decline of almost Ksh10 billion in six months.

In order to save its face, NBK has now opted to woo depositors with a lucrative savings plan even as it waits for a bailout which is in limbo because of disagreements between top shareholders, the National Treasury and National Social Security Fund.

Read: Deacons Placed Under Administration, De-listed From NSE

It is also offering a discount to its corporate loan delinquents but the plan has been hijacked by officers within the rank and file to get kickbacks on the deal, according to the Standard.

The paper reports that NBK is also bogged down by huge debts that it is unable to enforce due to litigation. This includes property owned by the late billionaire Tahir Sheikh Said (TSS) whose succession is in court.

TSS Investments, which owns TSS Grain Miller, was declared bankrupt last year, causing the Kenya Commercial Bank to take over for auction to recoup a Ksh2 billion loan.

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